Analysts said that despite such a sharp decline in Arpu, Jio has been able to report higher revenue — Rs 7,128 crore, up 3.6% sequentially — because it is still adding a huge number of subscribers every month, which is making up for its low-cost tariffs.

During the January-March period, the company’s net profit at Rs 510 crore was up 1.2% sequentially, and higher than that of Bharti Airtel.

Like the previous two quarters, Reliance Jio on Friday turned out an impressive set of numbers by posting a profit for the second consecutive quarter. During the January-March period, the company’s net profit at Rs 510 crore was up 1.2% sequentially, and higher than that of Bharti Airtel. However, tariff cuts in January, which also saw the introduction of a Rs 49 pack for its feature phone (JioPhone) offer from the earlier Rs 153, saw its average revenue per user (Arpu) drop a sharp 11% to Rs 137 compared with the preceding quarter. However, it was still higher than Bharti’s Rs 116.

Analysts said that despite such a sharp decline in Arpu, Jio has been able to report higher revenue — Rs 7,128 crore, up 3.6% sequentially — because it is still adding a huge number of subscribers every month, which is making up for its low-cost tariffs. Just for perspective, if Bharti Airtel adds around 1.5-2 million users per month, Jio adds around 7-8 million.

This means that Jio still has headroom to cut tariffs, withstand lower Arpus while reporting growth in profitability and revenue.Analysts also maintain that though Jio has been posting impressive numbers, its accounting practises differ from that of the incumbent operators. For instance, Jio does not fully capitalise its assets and spectrum is amortised on a usage basis rather than the straight line method by other telecom operators. Under Jio’s method, depreciation and amortisation depends on the pattern of consumption of expected future economic benefit, which is akin to the unit of production depreciation method. This means Jio has determined the total data capacity of its network over the life of the spectrum allocation and the consumption of GBs per quarter will determine the quantum of depreciation and amortisation charge. The D&A cost under this would be lower, especially in the initial years, compared to the straight line method.

During the quarter, Jio’s earnings before interest, tax, depreciation and amortisation stood at Rs 2,694 crore, up 2.5% from the preceding quarter, while margin was down 1.1% at 37.8%.

On other operating metrics, Jio continues to be far ahead of peers like Bharti. For instance, Jio’s data traffic at 5,060,000 million MB was much higher than Bharti’s 1,539,746 million MB. Jio’s data volume compared to the preceding quarter increased by 34%. Data usage per customer, though, saw a marginal 0.83% increase at 9700 MB per subscriber. Still, it is the highest in the industry as Bharti’s usage per customer stood at 6586 MB per customer.

But on total voice traffic, Jio with 372,180 million minutes was lower than Bharti’s 592,657 million minutes. This is because Bharti’s total user base is almost double of Jio’s. On its own, though, Jio registered an increase of 19.62% compared with the preceding quarter. However, Jio’s usage per customer was higher at 716 minutes, against Bharti’s 670 minutes. Here Jio registered a growth of 3.12% sequentially.

Jio’s monthly churn remains the lowest in the industry at 0.25%. In this, it has bettered its record as the churn was at 1.4% per month during preceding quarter. Bharti’s churn during the quarter stood at 2.8%.

Jio continued its strong subscriber growth trend with net addition of 26.5 million subscribers during the quarter as against 21.5 million in the preceding one. Its gross adds stood at 27.9 million and total subscriber base at 186.6 million.

Jio did not disclose the benefit which accrued to it during the quarter because of the 57% cut in mobile termination in the preceding quarter when its interconnect usage charge expense was lower at Rs 1,081 crore versus Rs 2,140 crore in Q2.

The cut in international termination rates, which hit Bharti during the January-March quarter, would not have affected Jio because the quantum of international calls terminating on its network is minuscule.

“The strong financial results of Jio in a competitive market environment demonstrates the robustness of the Jio business model and ability to offer the most value to our customers and partners. Jio has demonstrated that it can scale and sustain its strong financial performance,” Reliance chairman and managing director Mukesh Ambani said in a statement.